Buffalo Wild Wings, Inc. (BWLD)
Q4 2008 Earnings Call Transcript
February 11, 2009 at 5:00 pm ET
Mary Twinem - EVP and CFO
Sally Smith - President and CEO
Bryan Elliott - Raymond James
Paul Westra - Cowen & Company
Destin Tompkins - Morgan Keegan
David Tarantino - Robert W. Baird
Nicole Miller - Piper Jaffray
Brad Levington - KeyBanc Capital Markets
Will Hamilton - SMH Capital
Steve Anderson - MKM Partners
Conrad Lyon - Global Hunter Securities
Greg McKinley - Doherty Company
Previous Statements by BWLD
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This conference is being recorded today, Wednesday, February 11, 2009. I would now like to turn the conference over to Mary Twinem, Chief Financial Officer. Please go ahead.
Good afternoon and thank you for joining us as we review our fourth quarter 2008 results. I am Mary Twinem, Chief Financial Officer and Executive Vice President of Buffalo Wild Wings. Joining me today is Sally Smith, our President and Chief Executive Officer. By now everyone should have access to our fourth quarter earnings release, which went out after the market closed today. If you have not received the release, it is available on the Investor Relations section of our website at buffalowildwings.com. A script of our prepared remarks will also be posted on our website after the call.
Before we get started, I want to remind you that during the course of today's call various remarks we make about future expectations, plans, and prospects for the Company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.
Actual results may vary materially from those contained in forward-looking statements based on a number of factors, including without limitation, the number of locations opening during 2009 and beyond, the sales at these and our other company-owned and franchised locations, our ability to successfully operate a new market, the cost of commodities, such as fresh chicken wings, the success of our marketing initiatives, our ability to control restaurant labor, and other restaurant operating costs, and other factors disclosed from time-to-time in our filings with the US Securities and Exchange Commission.
On today's call, Sally will provide an overview of the fourth quarter and full year results for 2008. After that, I will provide further detail on our recent financial performance and comment on trends in the first quarter. Finally, Sally will share some thoughts about the first quarter and the year ahead. We will then answer questions.
So, with that, I will turn it over to Sally.
Good afternoon, everyone. First, let me say I am excited to be here today to share our strong fourth quarter and full year 2008 results. Our outstanding revenue growth is 32.6% for the fourth quarter, translated to net earnings growth of 28.7%. Our performance demonstrates the strength of the Buffalo Wild Wings brand and the high level of execution by our franchisees and team members throughout the organization. When we updated our annual performance target for 2008 in our October conference call to 15% unit growth, 25% revenue growth and 20% to 25% net earnings growth, we were confident in our ability to deliver on these metrics by remaining focused on our key strategic initiatives and executing on the tactics to achieve these goals.
We are very pleased to announce we exceeded our annual revenue growth goal achieving a 28% increase over the strong results of 2007. The key factor of this success is our ability to consistently provide our guests with great food and a fun experience that gives them a reason to come back to our restaurant again and again.
We asked our guests to rate how we were doing through online and 800 number call-in comments and we saw increases in our guest royalty scores in each quarter of 2008. We believe these scores are leading indicator of future performance. Our food taste and the promptness of food delivery and staff are also areas that our guests say we have improved upon throughout the year and they are telling us our restaurants have a better appearance and more inviting.
Our net earnings for the year are equally impressive. We achieved the high end of our goal for the tireless efforts of our team members to work more efficiently and effectively. Their efforts in addition to making long term investments like HDTV upgrades are the foundation that will keep us well positioned for the future. With our aggressive growth, we ended the year with 560 restaurants, a net increase of 67 units and our reach expanded to 38 cities. While we opened slightly fewer restaurants than planned it did not impact our ability to achieve our revenue and net earnings goals.
We continue to hone the already successful restaurant opening process we set in motion over the past few years. As a result, sales at our new and relocated restaurants contributed to an increase in average unit volume of 8.7% for our Company-owned and 3.2% for franchise locations for the year.
Our operations team remained committed to developing the bench strength of our general managers through a new selection process which we believe reduced turnover and growth sales throughout the year. We also saw positive results from the score card program we established that ranks each restaurant on key element of profitability. The use of the score card intend them with our focus on costs saving program, such as theoretical costing, waste management and labor scheduling but the year-over-year improvement in our Company-owned unit level performance throughout 2008.